Some stocks have skyrocketed year to date. Indeed, shares of some technology companies more than doubled over the last six months. This rally has been fueled by improving investor sentiment and excitement about artificial intelligence. These hypergrowth stocks appear to be carrying their momentum into the year’s second half, continuing to rally to new heights.
Now, some tech stocks have achieved astronomical valuations simply due to portfolio rebalancing. While some analysts continue to predict a market downturn, there doesn’t appear to be any pullback in a number of hypergrowth stocks that keep outperforming the broader market by a wide margin. We asked artificial intelligence for its hypergrowth stock picks, and this is what it came up with.
Here are seven hypergrowth stocks that AI is loving in July.
It might not be for everybody, but one hypergrowth stock that AI is loving in July is Carvana (NYSE:CVNA).
Through six months of the year, CVNA stock has gained 740%. In January, the share price traded at less than $5 apiece. Today, it is near $40. Notably, the meteoric rise of the online used car retailer is widely attributed to a short squeeze. With more than 60% of Carvana’s stock sold short (meaning traders are betting it will go down), retail investors saw this potential short-squeeze target as one to buy.
Apparently, AI didn’t take the effects of a short squeeze into account when recommending CVNA stock. The huge gains in Carvana’s share price this year make little sense. This is especially true when one considers that prices for used vehicles have been spiraling downward. The latest data showed that used car prices in the U.S. fell 4.2% in June from May of this year. Declining prices for used cars is one of the biggest factors in pushing the inflation rate down in America. But try telling that to the “apes” on r/WallStreetBets.
Marathon Digital Holdings (MARA)
Marathon Digital Holdings (NASDAQ:MARA) is a leading cryptocurrency miner, and its stock has been surging this year. So far in 2023, MARA stock is up nearly 400%. This move has been driven higher by the huge rebound in crypto asset prices, notably Bitcoin (BTC-USD), which has rallied 83% year to date and is trading above $30,000 at the time of writing. Other cryptocurrencies such as Ethereum (ETH-USD) are also on the upswing, driving demand and momentum for MARA stock.
In May, Marathon Digital reported that its Bitcoin production surged 74% year-over-year in Q1. It also said its cash holdings rose by $12 million, and the company managed to lower its net debt by $50 million.
Certainly, this is all music to the ears of analysts and investors. Marathon Digital also increased its Bitcoin holdings by 3,132 BTC, and said it plans to further expand its Bitcoin mining operations as crypto prices remain buoyant heading into this year’s second half. Other crypto mining stocks have also risen sharply this year, but MARA stock gets the nod from AI.
Perhaps a bit ironically, one of the stock recommendations on this list is pure-play artificial intelligence company C3.ai (NYSE:AI). In many respects, this recommendation makes sense, given the extreme hypergrowth seen in this stock year to date. Since January, AI stock has increased 264%, trouncing the performance of nearly every other security available. Retail investors, in particular, seem to love C3.ai, piling into the stock as they search for any investments related to the artificial intelligence theme.
No mention was made of the fact that C3.ai is a comparatively small company and stock. The company generated only $72.4 million of revenue in its most recent quarter, and holds a market capitalization of $4.65 billion. Additionally, the growing short interest in C3.ai should be considered. Currently, more than a quarter of AI stock is sold short by professional traders, meaning they are betting that the share price will decline in coming months.
Still, for now, momentum seems to be on the side of C3.ai, and it continues to be a hypergrowth stock AI thinks is worth buying.
Microchip and semiconductor company Nvidia (NASDAQ:NVDA) was the best-performing stock in the S&P 500 benchmark during the first half of 2023. NVDA stock gained 190% between January and the end of June, far outpacing the index’s 16% first half gain. Indeed, NVDA stock continues to be in hypergrowth mode and is now up 206% on the year. Like C3.ai, Nvidia’s bull run can largely be attributed to the role its chips and semiconductors play in artificial intelligence applications.
Seen as a key player in the AI arms race, NVDA stock is now up more than 600% over the last five years. The current rally has pushed the stock to a market capitalization above $1 trillion, officially making Nvidia a mega-cap technology concern. Despite the big run this year, Nvidia’s share price is seen as having more runway ahead. The company is certainly doing all it can to capitalize on the hype surrounding AI, recently unveiling a new supercomputer called DGX GH200 that will help companies create chatbots more powerful than ChatGPT.
Electric vehicle maker Tesla (NASDAQ:TSLA) is another AI recommended hypergrowth stock, having risen 152% so far this year. Momentum in the stock has only grown since Tesla announced better-than-expected second quarter production and delivery numbers. The closest approximation to sales the company has, Tesla reported 466,140 vehicle deliveries in Q2, crushing Wall Street forecasts. The rise in deliveries coincided with incentives and discounts offered to buyers in the first half of the year, as well as a $7,500 U.S. federal tax credit.
Tesla’s stock has also come roaring back since company CEO Elon Musk shifted his focus back to the EV maker and away from Twitter, the social media company he bought last fall for $44 billion. There had been concerns among analysts that Tesla faced competitive threats from larger, more established automakers. However, those worries seem to have been calmed by news that players such as Ford Motor Co. (NYSE:F) will pay Tesla for access its charging network, further cementing the company’s lead in the EV market.
Maybe it’s because Apple’s (NASDAQ:AAPL) share price has rallied 52% this year. Or maybe it’s because the company recently became the first publicly traded company to achieve a $3 trillion market capitalization. Whatever the reason, consumer electronics giant Apple is an AI-predicted hypergrowth stock.
Having officially achieved a $3 trillion market valuation, Apple is today the world’s most valuable company. Apple is also one of the few mega-cap technology companies whose gains this year are not driven by its role in artificial intelligence.
Compared to its peers, Apple has relatively little exposure to artificial intelligence. Rather, investors seem to be attracted to the company for its strong balance sheet, impressive free cash flow, and the popularity of its electronic devices like iPhones and MacBook computers. Apple also continues to push into new areas such as online payments and augmented reality headsets. Most recently, Apple announced that it has opened a new store on the popular Chinese social media app WeChat, expanding its reach in the nation of 1.4 billion people.
Momentum behind e-commerce company Amazon (NASDAQ:AMZN) is expected to grow, with its latest Prime Day sales event that ran between July 11 and July 12. Bank of America (NYSE:BAC) analysts forecast that the latest Prime Day will generate $12 billion in sales for Amazon, which would represent 10% year-over-year growth and give the company’s Q3 earnings a nice boost. It could also help to further boost AMZN stock, which is already up more than 50% this year.
Beyond Prime Day, Amazon also recently opened its new second headquarters in Arlington, Virginia and announced plans to unveil a host of new technologies at an event scheduled to take place on September 20. The company said it will release its latest and greatest tech devices at a “Devices and Services” event in September. While it’s not clear what products Amazon plans to unveil at the upcoming event, the company launched the Kindle Scribe e-reader, Halo Rise sleep tracker device, and the Eero PoE 6 router at its similar 2022 event. Stay tuned.
On the date of publication, Joel Baglole held long positions in NVDA, AAPL and BAC. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.